At last, Argentinians in Argentina


BUENOS AIRES -- Argentina has often seemed to be a country, but not a nation.

By the beginning of the 1990s, it was on the verge of collapse. Blessed with the kind of natural resources that made the United States a rich country, the 34 million descendants of immigrants who came here from Spain, Italy and Germany never seemed willing or able to come together as "Argentinians."

The place was like a bank, a rich one, being robbed by its own people. The country, as sophisticated as any, was basically closed to the rest of the world after the 1950s. And then, after a time, there was no freedom of press or of assembly; dissidents "disappeared."

Life was not intolerable for most, but it was in decline. Argentina was living on its abundant agricultural output, but it was manufacturing goods with broken-down machinery and methods of the early 1950s.

There was essentially no modern investment or development.

The robbers paid no taxes and shipped their money abroad to TC Europe and to the United States. And when the robbed, the poor, showed any signs of resisting rape and pillage, military dictators were installed to put them down and shut them up.

Dark days in the 1980s

Then, with the military discredited in 1983 after its disastrous defeat by the British in the Falklands War, the country turned back to democracy and things seemed to get even worse.

By 1989, there was little tax collection and less investment, inflation that reached 7,000 percent a year, and a populist demagogue named Carlos Menem taking over as president.

All of this was happening in a country which once, before World War I, had a higher per capita income than the U.S.

I was here in February 1990, exactly six years ago, when the value of the peso dropped 25 percent in a single week. With dollars in my pocket, I felt like a king or a thief, eating the best steak dinners in the world for $4 or so and buying a Christian Dior suit for $55. If I had waited a couple of days, I could have gotten it for $45.

Among the people I interviewed then was the new finance minister, Domingo Cavallo, an American-style free-market economist who said all that could be changed. Good luck, sir, I wrote then.

Well, he did it, more or less. Or Cavallo and Menem did it together.

The left-winger and the free-marketeer, the odd couple, have Argentina on its feet for the first time in many decades. Inflation is single-digit and the currency is relatively stable.

A real nation

There is a nation now, and the rich and famous are willing to bring their money home and invest it in their own country. The economy was growing at about 7 percent or so a year until a recession last year, blamed on the confidence crisis in South America after the free fall of the Mexican peso. (Unfortunately for visiting Americans, prices are about at world levels now, two to five times what they were six years ago. No more cheap suits for me.)

Nothing is for sure here. The inherent volatility of Argentina was demonstrated last summer when there were harsh words between Menem and Cavallo, followed by the giant sucking sound of investment money moving back toward Miami, Paris, Madrid and other points north.

But within a week, the politician and the economist got themselves together again. Cavallo picked up a few more titles; he is truly an economic czar, a caudillo, the man on a white peso.

Cavallo's leadership

What Cavallo did, under the protection of Menem -- a Peronista able to sell capitalism, its comforts and discomforts, to unions and workers -- was neither magic nor mysterious.

He sold off the country's state-owned infrastructure -- the telephone system, the airlines, the petrochemical complexes -- then "downsized" the government itself and pegged the currency to the U.S. dollar.

"What a story," said James Cheek, the enormously popular American ambassador here. "It took great political leadership and great economic will. Menem and Cavallo -- one without the other wouldn't be worth much, but together ..."

In the end, said Cheek, it was the people of the country, finally thinking of themselves as Argentinians, who were willing to accept capitalist pain, downsizing and the job elimination that came with modern machinery and cheap imports. But they had been to the abyss, and, at last, they preferred Argentina.

The change is probably irreversible, but it may not be sustainable. Much of the transformation has been financed by government privatization -- "the selling of the family jewels," it is called here.

But Argentina has survived and is beginning to thrive once more. Perhaps this nation will again become as rich as God obviously intended it to be.

There are now Argentinians in beautiful Argentina.

Richard Reeves is a syndicated columnist.

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